1. Determine the price of the bonds issued on January 1, 2024. 2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2024. 3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2024 (at the effective rate). 4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2024 (at the effective rate).
1. Determine the price of the bonds issued on January 1, 2024. 2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2024. 3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2024 (at the effective rate). 4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2024 (at the effective rate).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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McWherter Instruments sold $450 million of 8% bonds, dated January 1, on January 1, 2024.
. The bonds mature on December 31, 2043 (20 years).
For bonds of similar risk and maturity, the market yield was 10%
• Interest is paid semiannually on June 30 and December 31.
.
Blanton Technologies, Incorporated, purchased $450,000 of the bonds as a long-term investment.
Required:
1. Determine the price of the bonds issued on January 1, 2024.
2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2024.
3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2024 (at the effective rate).
4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2024 (at the effective rate).
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of S1, EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
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Determine the price of the bonds issued on January 1, 2024.
Note: Enter your answer in whole dollars.
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